The Shocking Costs of Order Fulfillment

It's not easy for businesses to meet the needs of today's consumers, who expect next-day delivery and extraordinarily low prices. Most successful retailers have adopted omnichannel fulfillment strategies that give shoppers opportunities to purchase products from multiple locations, such as in stores or online, so they get a seamless experience.

While order fulfillment is crucial to the success of retail stores, many companies struggle to keep fulfillment affordable. If you are ready to make your fulfillment process more efficient and cost-effective, pay attention to these three costs affecting your business and customers.

Distance from the Warehouse to the Customer

The farther your distribution center is from your customers, the more money you will spend on delivery services. Delivery involves much more than just the cost of gasoline. You also have to consider the costs of:

  • Insurance
  • Maintenance
  • Repairs
  • The driver's salary and expenses

Some estimates show that it costs about a $1 for every mile the delivery truck travels. You can lower the cost-per-item by shipping more products simultaneously, but you can always expect to spend about a $1 per mile.

Choosing a central location for your warehouse is one of the most effective ways to lower shipping costs. Many companies prefer warehouses located in Northern Texas because the area is a two-day drive to 85 percent of the country's population. By shortening the distance from the warehouse to the customer, businesses can save quite a bit of money.

Here at The Apparel Logistics Group, we know that a central location based upon customer demographics is pivotal. We measure initial and final order fill rates as one of our key performance indicators to avoid lost sales. We're always analyzing ways to improve our speed to market, as that's a crucial success factor in this industry.

Shipping Delays

Shipping delays don't always have a direct cost you can measure, but there are almost always unseen costs that will affect customer satisfaction and, therefore, business success. Losing potential sales is the most damaging aspect of shipping delays. If you can't deliver your product within two days, a faster company will attract your customers.

Identifying where shipping delays start is one of the most effective ways to prevent them. Some common origins include:

  • Labor disputes
  • Bad weather
  • Poor supply chain planning

In one case from 2015, a labor dispute increased retailer costs by $3.8 billion to $7 billion.

The Apparel Logistics Group lowers the risk of these factors by working closely with our partners, using various shipping options, and strategically optimizing every aspect of the supply chain.

Out-of-Stock Items

Few things are more damaging to a retail business than out-of-stock items. Shoppers are disappointed when they find items on your website, but those items are out of stock. At the very least, they will buy those items from another company. Unfortunately, this gives your competitor a chance to convert that person into a long-term shopper. Instead of visiting your site in the future, the disappointed shopper is more likely to visit the site that has worked well before.

Tracking your stock in real time can reduce or eliminate out-of-stock items. When the system knows you are running low on a specific item, it can order more to ensure your store has it in stock.

The Apparel Logistics Group has supply chain and order fulfillment services that can lower your business's costs. Just visit this page to answer a few questions that will help a representative find the right solutions for you.

Posted: 5/25/2016 9:56:24 AM by Global Administrator | with 0 comments

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